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Economist says recent gains in stocks will end in 2024

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If central banks implement interest rate cuts later than investors are currently pricing in, the latest stock gains will last through the end of the year and avoid a mid-year market correction, an economist says.

Ludovic Subran, chief economist at German financial services firm Allianz, told CNBC’s “Squawk Box Europe” that gains will remain in line with recent rallies despite seasonal volatility, as markets potentially price in a different rate cut trajectory from central banks. May change again. monday.

Investors currently “expect a big pivot and they expect a very early pivot,” Subran said, despite signals from central banks suggesting a mid-year rate pivot could be lower than previously thought. Is.

“That means there will be substantial volatility ahead when people are going to re-rate, but I also think that the gains we’ve seen from the last part of ’23 and the beginning of ’24 will continue to occur by the end of the year.” Gonna be the year,” he continued.

European stocks declined regionally during the last two months of 2023 stoxx 600 According to LSEG data, the index increased by 12.7% year-on-year. America S&P 500 Meanwhile, the price has continued to rise since late October and on Friday closed above 5,000 for the first time on record.

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Stoxx 600 Index.

While companies have reported a solid earnings season in recent weeks, the market has experienced only a slight dip in sentiment as some central bankers have pushed back expectations of rate cuts – particularly in Europe.

“I think it’s going to be very seasonal. So we’re probably going to have a correction… Investors will see that the change is not going to be so big because of the growth resilience in the US, or maybe because of inflation. In Europe Stickiness,” Subarna told CNBC.

“But then I think by the end of the year, we’re going to get a pretty good 5-10% equity return. And that’s good enough, you know, for a year of everything else getting back to normal in the economy.”

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